In this extract from our digital Insight magazine in October, we explore the challenges when engaging with younger clients in conversations around income protection.
Unlike older clients, who may be motivated by family responsibilities, mortgage commitments or experiences of health issues, younger people often feel protection is something they can put off. However, the earlier protection is put in place, the more cost-effective and valuable it can be. So how can advisers bridge the gap between perception and reality?
Profile of an Income Protection Customer
Recent data from the Income Protection Task Force and Iress (2024) reveals a notable shift in the demographics and buying behaviours of income protection customers. The findings show that younger clients are increasingly engaging with income protection, particularly through multi-benefit plans that combine with other types of cover. On average, clients purchasing income protection with a multi-benefit arrangement are around four years younger than those opting for stand-alone policies. Multi-benefit plans are proving to be an effective entry point for cost-conscious clients who still recognise the importance of safeguarding their income.
Another encouraging trend is the growing preference for full-term policies among younger individuals. More clients in this demographic are now selecting longer pay out periods, suggesting that advisers are successfully communicating the long-term value of comprehensive cover, even when it comes with a slightly higher premium. This shift away from short-term policies reflects a maturing understanding of financial resilience among younger buyers. The challenge now is to sustain this momentum, continuing to engage the next generation with conversations that make income protection feel both relevant and essential to their lives.
"It Won't Happen to Me"
Younger clients are often healthier, early in their careers, and may see income protection as an unnecessary cost. They might be earning modest salaries and feel premiums are better spent on rent, social activities or building up their savings. For many, protection is seen as something you buy later in life when you purchase a home, start a family or get married. This mindset ignores the fact that once someone relies on their income, they have a protection need. Statutory sick pay is limited, employer sick pay varies widely and not every individual can rely on family support. Accidents, mental health and serious illness do not respect age.
Shifting the Narrative
Traditionally, protection has been sold around life events. While these triggers remain important, advisers must acknowledge that many younger individuals could be delaying or skipping these milestones altogether. Renting rather than buying, choosing not to have children early or remaining unmarried are increasingly common. This doesn’t mean there’s no protection need, it just means the conversation must be shifted. Instead of focusing on hypothetical ‘future family’ scenarios, position protection as a way of safeguarding lifestyles now. For a 25-year-old, losing their income for even a short period could mean moving back in with parents, relying on credit cards or seeing independence removed overnight.
Finding Value
One reason younger clients might struggle to engage with income protection is that it feels like paying for something they may never use. Even if the worst never happens, value added benefits within a policy can bring it to life with something they can use day to day. Comprehensive cover can transform the conversation from ‘I hope I never need this’ to ‘this is something I can use now’.
Another crucial point is affordability. The younger a client is when they take out a policy, the cheaper it will be and they’re less likely to face exclusions. Framing income protection as a way to lock in long-term value can resonate with younger clients who are used to subscription models and rising costs.
The Resilience Gap
The latest Reaching Resilience research from LV= (January 2025) shows why these conversations are necessary. While nearly seven in ten workers describe themselves as financially resilient, only four in ten households could actually survive three months without an income. One in ten workers have no savings and 42% have less than £10,000 put aside, not enough to cope with a long-term income shock. Despite this, just 7% of workers say they would rely on a protection policy. The majority would plan to use savings, borrow money or lean on family for support. These insights demonstrate how quickly those fallback plans could unravel and how income protection can support them.
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